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Sainsbury’s, Asda, House of Fraser: Everything that matters this morning

Sainsbury’s and Asda could face ‘73 store closures’

At least 73 supermarkets could be forced to close if the merger between Sainsbury’s and Asda is given the green light, according to new research.

Speaking to the BBC director of Maximise UK David Haywood, a specialist in identifying store locations for brands, believes that at least 6% or 73 of the combined group’s supermarkets are at risk, excluding convenience stores. These calculations take into account Aldi and Lidl as competitor brands, alongside Tesco and Morrisons.

Stores in the south-east and the north-west of England are most likely to be under threat if approval is given to create the UK’s largest new supermarket group by market share.

The £15bn deal will face scrutiny by the Competition and Markets Authority (CMA) regulator to ensure that the merger will not allow either company to become too dominant. A primary area of focus will be whether the deal reduces the number of competing brands within a 10 or 15 minute drive time.

House of Fraser slumps to £44m loss

The House of Fraser Group has slumped from a £1.5m pretax profit in 2016 to a £43.9m loss in 2017, according to documents filed on the Hong Kong stock exchange.

The filing was made by C.banner, the Chinse conglomerate and owner of Hamley’s, which is in the process of acquiring a 51% stake in House of Fraser for £140m from current owner Nanjing Cenbest. The Guardian reports that the £43.9m loss includes startup costs for the launch of House of Fraser stores in Nanjing and Xuzhou, and fees paid to the UK business for use of the brand name overseas.

The filing also reveals that House of Fraser’s sales fell by 6.3% to £787.8m due to tough trading conditions in the UK.

In a statement C.banner confirmed to investors it plans to enhance House of Fraser’s retail market in China and lay the foundation for a “new brand and retail roadmap overseas”. The Chinese group also stated it would deliver cost savings by bringing together its footwear businesses Sundance and MIO with Hamleys and House of Fraser.

Streaming service Tidal accused of manipulating data

Music streaming service Tidal has been accused of inflating audience figures for two albums – Lemonade by Beyonce, and The Life of Pablo by Kanye West.

Norwegian newspaper Dagens Naeringsliv claims that Tidal inflated the figures in order to pay disproportionate royalties to Beyonce and Kanye West’s record labels at the expense of other artists. Tidal is part-owned by Beyonce’s husband Jay Z, who is also a long-term collaborator of Kanye West.

Dagens Naeringsliv has not provided any evidence that Jay Z would have personally been aware of any figures being altered or that Beyonce and Kanye West would have known their listening numbers could have been inflated.

The newspaper does however claim to have obtained royalty reports showing Tidal paid Sony Music $2.5m (£1.8m) in April and May 2016 for the streaming of Lemonade and paid €2m ($3.0m; £2.2m) to Universal Music in February and March of the same year for the streaming of The Life of Pablo. Dagens Naeringsliv also says it has obtained a hard drive with “extensive data” revealing the sums were excessive.

Tidal vehemently denies the claims, describing Dagens Naeringsliv’s allegations as a “smear campaign”. However, the newspaper has hit back saying that it has been trying to get comment from Tidal on this “well documented story” since February.

BBC teams up with commercial radio to support Mental Health Awareness Week

For the first time the BBC and commercial radio stations around the UK will join forces to broadcast a one-minute message about mental health. Airing on 15 May during Mental Health Awareness Week (14-20 May), the broadcast will feature famous people talking about the stigma of mental health.

The message is supported by The Royal Foundation’s Heads Together campaign, which brings together eight mental health charities including Young Minds, CALM and Mind. Launched in 2016, Heads Together aims to change the national conversation on mental health and tackle the stigma that prevents people from getting help.

Over 300 stations will take part in the broadcast, bringing together a collective average listenership of 20 million.

“At its heart Heads Together is about bringing people together to change the conversation on mental health,” said Lorraine Heggessey, chief executive of The Royal Foundation. “Nothing exemplifies this more than radio stations from all networks focusing their airtime on such an important topic and talking directly with their listeners.”

Argentinian restaurant group Gaucho is mulling the closure of its casual dining steakhouse chain Cau, putting 700 jobs at risk.

Launched in 2010, the chain specialising in burgers, light bites and Argentine steaks expanded rapidly to open 22 restaurants across the UK. However, over the past year Cau has seen double digit declines in sales amid cautious consumer spending and heavy competition in the bloated fast casual sector.

The private company which owns both Cau and the higher end Gaucho restaurant chain, confirmed that as Gaucho is performing in line with expectations its 20 branded restaurants are likely to be safe from closure.

According to reports in The Guardian, Gaucho is understood to be considering closing Cau via a company voluntary arrangement (CVA). CVAs have already been implemented by fellow fast casual casualties Byron, Jamie Oliver’s Jamie’s Italian restaurants and Chimichanga owner Prezzo to close stores or cut rents over recent months, while House of Fraser is expected to close 20 stores via CVA next month.

Thursday, 10 May

Asda suspends £99 petrol pre-charge after customer backlash

Asda has suspended its trial of a £99 deposit at automated petrol pumps after it was widely criticised by customers.

The “pre-authorisation charge”, which was introduced at three outlets, deducts money from the driver’s bank balance or credit card, however the money never actually leaves the customer’s account. It is held until the payment for the petrol has cleared at which point it is returned.

Customers were not happy about the change though, with one woman describing the charge as an “absolute joke” on Facebook, claiming she was still waiting to be reimbursed days after visiting the petrol station and that Asda had not made her aware of the change.

An Asda spokesperson said: “We take any customer complaint seriously, but it’s important to clarify that at no point has Asda taken or held [the customer’s] money as a result of this transaction.

“Visa and Mastercard have increased the minimum pre-authorisation amount at pay at the pump petrol pumps for all retailers and unfortunately there seems to have been a delay in [the customer’s] bank releasing the hold.”

But following the backlash, Asda said it would “suspend” the scheme until it has reviewed the situation as it “always want to do the right thing” for its customers.

Morrisons hails ‘strong’ start to the year

Morrisons has posted a 3.6% rise in like-for-like sales excluding fuel for the 13 weeks to 6 May, in what CEO David Potts has called a “strong” start to the year.

The supermarket has been steadily investing in its customer experience and improve competitiveness as it looks to take on its ‘big four’ rivals and compete with the discounters.

Morrisons operates as both a retailer and wholesaler with both portions of the business contributing 1.8% during the period.

As part of its wholesale business, the chain started supplying McColl’s stores with fresh, frozen and ambient food under both the Morrisons and McColl’s names as well as the new Safeway range. The group says it is on track to hit its target of £700m in annualised sales by the end of the year and £1bn in due course. ​

Next attributes Q1 sales boost to unusually warm weather

Next has defied the slow high street after posting a 6% rise in sales for the 14 weeks to 7 May, boosted by the recent weeks of unusually warm weather.

Sales during the quarter were “better than expected” and around £40m ahead of its internal forecast.

The rise was driven by online sales of both the Next brand and third-party labels, as well as overseas growth, which led to an 18.1% increase during the period. In-store sales, meanwhile, took a 4.8% hit.

Given the sales over-performance, Next expects to add around £12m to its full-year profit.

Walmart takes on Amazon with Flipkart deal

Walmart has agreed a deal to buy a majority stake in Indian ecommerce giant Flipkart for $16bn in a move it hopes will boost its presence in India, as it takes on online behemoth Amazon, which also had its eye on the company.

Walmart will acquire an initial stake of around 77% in Flipkart, with the remainder of the business held by existing investors, including Tencent, Tiger Global, Microsoft and Flipkart’s co-founder Binny Bansal.

Walmart’s president and chief executive, Doug McMillon, says the investment is part of the company’s plan to invest in India’s fast-growing economy.

“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of ecommerce in the market,” McMillon said in a statement.

Walmart says it expects India’s ecommerce market to grow at four times the rate of the overall retail industry.

Apple removes apps that share users’ data without their consent in GDPR crackdown

Apple has started removing apps from the App Store that share users’ location data without their consent.

Apple has told some developers that “upon re-evaluation” certain apps violate of its data privacy rules. The tech giant wants to ensure app developers inform users what their information is being used for rather than simply asking for their permission to use it.

The move comes shortly before the new General Data Protection Regulation (GDPR) laws are enforced on 25 May, which has already seen Apple “revamp” its privacy controls in preparation.

Wednesday, 9 May

BMW and Halfords ads banned for promoting dangerous driving

BMW and Halfords have had their ads banned by the Advertising Standards Authority (ASA) for promoting dangerous driving.

BMW’s TV ad for its xDrive all-wheel drive system first appeared on 5 November last year and showed cars driving in various weather conditions and terrain. The ASA received a single complaint about the advert from a viewer who suggested it condoned dangerous driving.

Despite BMW arguing that the cars were driven in a safe and responsible manner, the ASA has banned the advert.

A similar ad for Halford has also been banned after two complainants said it encouraged unsafe driving practices in snowy conditions. The TV ad shows a sped-up view from the vehicle’s windscreen of a snow-covered road which implied the car was being driven at high speed around several curves and bends in the road, accompanied with engine sounds.

However, despite receiving 10 complaints, Audi’s ad for the R8, which featured a car driving across a snowy plane, was not upheld.

“The ad was intended to promote, in a visually arresting but accurate way, the safety feature designed to enhance safe and responsible driving in wintry conditions,” a Volkswagen Group UK spokesperson says.

Britain hit with sharpest sales drop on record

UK retailers have been hit with the sharpest sales drop in 22 years during April, likely due to poor weather and the timing of Easter.

Same-store sales dropped 4.2% year on year while the British Retail Consortium (BRC) also reported a 3.1% decline in total sales – the most severe decline since the survey began in 1995.

Despite wages rising more quickly than prices, retailers have been warned to prepare for a tough year ahead with spending on non-food items feeling the brunt of the sales decline.

BRC explained that Easter fell in the middle of April in 2017 while it was two weeks earlier this year meaning the majority of purchases were made in March.

However, BRC chief executive Helen Dickinson says that even when taking all those factors into account sales growth is still “heading downwards”.

“With much of the spending in preparation for the bank holiday weekend falling in March this year, a record low in sales growth, in contrast to last year’s record high, does not come as a surprise,” she says.

Google wants to fight smartphone addiction with new update

Google wants to fight smartphone addiction by introducing an app telling users exactly how much time they spend on their phones amid fears they are getting too addicted.

The tech-giant unveiled the update at its I/O developer conference in Silicon Valley and says the key feature, to be included in the next version of Android, will also help users set time limits on apps and is a part of Google’s wider focus on “digital wellbeing”.

As part of the update, a dashboard will track the users phone usage telling people how long they spend in each app throughout the day, noting how many times they unlock their device and how many notifications they receive.

Users can also set time limits on apps or switch on the ‘shush’ mode, which is basically a do not disturb mode that activates when a user places their phone screen down.

It also features a ‘wind down’ mode. To activate this a user can set their bed time and the phone will automatically go into do not disturb mode and switch to greyscale.

Parents can also monitor their kids’ phone usage through the ‘watch your kids’ app which allows them to control their child’s devices.

Instagram launches new tools for businesses to manage messages

Instagram has launched new tools that will make it easier for businesses to curate messages and inquiries from customers.

As part of the upgrade, the social network has introduced call-to-action buttons on select business profiles as well as new ways for businesses to filter their Instagram direct messages.

Currently more than 150 million people have a conversation with businesses through Instagram Direct each month and a third of those messages begin with an Instagram Story.

According to the social platform, businesses will now see important new customer messages in their main direct inbox where they will also be able to start and filter conversations. Also, in the next few weeks Instagram says it will begin testing quick replies, making it easier for businesses to respond to common questions.

“We’re also making it easier to turn discovery into action through new action buttons on business profiles. You’ll now be able to ‘buy tickets,’ ‘reserve,’ and ‘book’ right from a businesses profile so you can take action without having to leave the app,” an Instagram spokesperson says.

Some of the platform’s 25 partners include Eventbrite, Resy, StyleSeat and MindBody.

New research claims ads ignore the poor

The advertising and media industries are perpetuating harmful socio-economic stereotypes because they’re too focused on rich and middle-class households, according to new research.

A survey of more than 2,000 UK adults by media agency UM found 62% of Brits are concerned TV ads only portray wealthy homes, while 63% believe the poor are negatively stereotyped in advertising.

It also revealed 41% of those who come from the C1, C2, D and E social grades feel that media representations of people of their social background are often stereotyped and ridiculed.

Some 32% of Brits think public perceptions of the poor have become more negative over the past three years. Of those, 57% blame media coverage with 55% suggesting the media doesn’t give enough spotlight to poorer people. 44% want to see greater social inclusion in ads.

When asked why the poor currently aren’t more visible in ads, 45% of Brits say it’s because those ads wouldn’t sell the products, compared to 43% who say it’s because the poor ‘make people uncomfortable’.

“This industry needs to take the lead in challenging all the negative representations that are still so prevalent and dangerous. The ad industry might have been built on aspiration, but that doesn’t mean people with less spending power have none at all,” says Michael Brown, head of insight at UM.

Tuesday, 8 May

Nestlé signs global deal to start selling Starbucks products

Nestlé has paid Starbucks $7.1bn to sell its coffee products as the Swiss coffee giant looks to grow its US premium cofnee business and leverage “exciting new growth opportunities” across the rest of the world.

In addition to Nestlé marketing Starbucks coffee beans and ground and instant coffee globally, which currently generate an estimated $2bn in sales every year, Nespresso machine owners will be able to buy Starbucks coffee branded pods for home use.

“With Starbucks, Nescafé and Nespresso we bring together three iconic brands in the world of coffee. Both companies have true passion for outstanding coffee and are proud to be recognized as global leaders for their responsible and sustainable coffee sourcing.”

Nestlé is currently the largest coffee player in the world with a 22.6% share of the global market. However, it ranks fifth in the US with a 4.7% share, while Starbucks comes out on top with 13.7%, according to Euromonitor International.

While Starbucks and Néstle are playing up the deal, Neil Saunders, managing director of GlobalData Retail, says the deal is another example of how big consumer goods companies are struggling to develop and grow their traditional brands.

“Arguably, Nestlé’s preferred vehicles for driving growth in coffee would be its own Nescafé and Nespresso brands. However, these have failed to gain traction in North America and have reached maturity elsewhere. There is a case to be made that Nestlé has failed to innovate and develop either brand to the extent it should.”

Sainsbury’s and Asda merger risks damaging the environment

Food campaigners, environmentalists and farmers’ leaders have warned that the Sainsbury’s and Asda merger will have a long-term negative impact on food producers and the environment.

According to Dan Crossley of the Food Ethics Council, too much pressure on producers will increase the risk of shortcuts being taken, including environmental standards being lowered.

He also says it will reduce the likelihood of producers being able to make key long-term investments to drive environmental improvements, such as investing in renewable energy farms.

Meanwhile, the National Farmers’ Union (NFU) says it will be examining the details of the proposed merger “carefully” and the further concentration of retail power it creates within the food supply chain.

“The impact of the whole supply chain, all the way down to farm level, needs to be carefully assessed,” says NFU president Minette Batters.

M&S launches ‘Love it for Less’

Marks & Spencer has launched a new clothing campaign ‘Love it for Less’, promoting its exclusive clothing line both in-store and online.

“Summer is in the air this weekend and we want to ensure that our customers can look fantastic – without breaking the bank,” says Nathan Ansell, M&S’s clothing & home marketing director.

“We’ve got so many great value summer lines for all the family and our “Love it for Less” campaign highlights these for our busy customers.”

To coincide with the campaign, M&S has also lowered the price of more than 500 products, which will be highlighted to customers with ‘New Lower Price’ décor throughout its stores.

The ‘Love it for Less’ campaign is the latest marketing push from the retailer as it looks to promote the two sides of its business – food and general merchandise. Last week, it rolled out the ‘My M&S Favourite’ campaign across 1,000 UK stores, which sees its food staff wearing personalised badges and revealing their favourite product.

Nissan to stop selling diesel cars in Europe

Nissan plans to gradually withdraw diesel cars in Europe and focus on its “electrification push” as demand for diesel models slows.

A spokesperson for Nissan says the Japanese car manufacturer, along with other manufacturers and industry bodies, can see the “progressive decline of diesel” but that it does not anticipate its sudden end in the short-term.

“At this point in time and for many customers, modern diesel engines will remain in demand and continue to be available within Nissan’s powertrain offering,” Nissan says.

“In Europe, where our diesel sales are concentrated, our electrification push will allow us to discontinue diesel gradually from passenger cars at the time of each vehicle renewal.”

Retail M&As up 15% in 2017

Retail mergers and acquisitions have grown 15% over the last 12 months, according to law firm RPC.

There were 37 retail M&A deals in the year to 31 March compared with 32 the previous year, which RPC says shows market leaders are “looking beyond all the hype about the ‘meltdown of the high street’ and getting on with building breadth of offering and scale.”

However, the overall value of the deals declined by -16% from £4.3bn to £3.7bn. RPC said it is important that sellers and creditors are “sensible” over the prices they are expecting from M&A deals in the current climate.

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